EUR/USD Forecast: still pressuring the critical 1.1460 support area

Valeria Bednarik FXStreet

EUR/USD Current price: 1.1472

Italian FM Tria due to address lawmakers in the next couple of hours.
US Treasury yields jumped to fresh multi-year highs after Monday's holiday.

The EUR/USD pair flirted with the 1.1500 level overnight but was unable to recover the level, peaking at 1.1502 before quickly retreating, now nearing the 6-week low set Monday at 1.1459. The greenback shed some ground late US session as risk aversion eased, with Wall Street reversing early losses. Market's mood is slightly better early Tuesday, as Italian bond yields are quieter while local equities opened with modest gains. Tensions surrounding the Italian budget continue, with Italian Finance Minister Tria due to address lawmakers in the upcoming hours.

US Treasury yields, meanwhile, advanced to fresh multi-year highs, with the yield on the benchmark 10-year note up to 3.26% ahead of the opening, giving the greenback a lift against all of its major rivals. Given a light macroeconomic calendar, yields alongside Italian woes will likely keep on leading the way. So far, Germany released its August trade balance which showed a larger-than-expected surplus of €18.3B, amid a large decrease in Imports, down in the month 2.7%. Exports were also down but to a lesser extent, falling by 0.1%. The US has little to offer, with only a Fed's Evans speech and the IIBD/TIPP Economic Optimism Index for October, this last seen at 54.6 vs. the previous 55.7.

The short-term picture for the pair is neutral-to-bearish, as in the 4 hours chart, a flat 20 SMA around 1.1500 keeps rejecting advances, while the 100 SMA gains downward traction, now nearing the 200 SMA and both far above the current level. Technical indicators in the mentioned chart lack directional strength but hold within negative levels. The 1.1460 region is a tough long-term resistance area as the pair has multiple weekly highs around it between 2015 and 2017, and won't be easy to break but if the pair does, a steeper decline could be expected. To the upside, the pair would need at least to surpass 1.1560 to shrug off the negative stance and have a chance to recover further.

Support levels: 1.1460 1.1425 1.1390

Resistance levels: 1.1500 1.1530 1.1565

View Live chart for the EUR/USD

Author

Valeria Bednarik

FXStreet

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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